China says more state firms might be privatized

BEIJING (AP) — More Chinese state-owned companies might be spun off as private entities to help improve economic growth but Beijing will keep control of major industries, a Cabinet official said Thursday.

Regulators are working on plans to overhaul ownership following last month's Communist Party pledge to increase competition in state-dominated industries, said Huang Shuhe, deputy chairman of the panel that controls China's biggest government companies.

Economists say Beijing must curb the dominance of state companies that control swathes of the economy, from banking to oil to steel production, or risk seeing China's growth rate plunge. The development blueprint issued last month pledges to open more industries to competition, though it said state ownership will remain the core of the economy.

Huang gave no details of which companies or industries might be affected. The 117 companies controlled by the Cabinet range from areas regarded by many countries as strategic, such as oil or telecommunications, to a travel agency and a food processor. They include oil giant PetroChina Ltd., phone carrier China Mobile Ltd. and four of the world's biggest banks.

"State-owned industries that don't require state ownership can allow more 'social capital'," said Huang at a news conference, using the ruling party's euphemism for private investment. "State ownership could be reduced or entirely withdrawn."

Huang stressed that would apply only to some companies. He said those deemed "vital to national security" — a segment the government previously has said includes a wide range of companies — would remain entirely state-owned.

China's economic growth fell in the second quarter of this year to a two-decade low of 7.5 percent. It rebounded to 7.8 percent in the following quarter but analysts say that was due to higher government spending and growth might fade this quarter or early in 2014.